How Long Will It Take to Regain the 65,000+ Jobs Lost in Minnesota in 2008?

The near universal legislative support of the unemployment bill signed into law on Thursday by Governor Tim Pawlenty is a first step by the state to address an economic and employment crisis that is escalating at record levels in Minnesota. The bill will extend the unemployment benefits of more than 3,000 unemployed workers who have not yet qualified for a federal extension of their benefits for up to 33 weeks.

While this measure aimed at lessening the current economic hardships of a particularly vulnerable segment of the state is but a first step, Minnesotans are no doubt eager to see how the DFL-controlled legislature and Governor Pawlenty can work together to curb the current jobless explosion and begin to restore these tens of thousands of men and women to the workforce.

Unfortunately, the grim prose invoked of late by the governor characterizing the dire economic situation faced by the state is not simply a political maneuver to lower expectations of his administration. He has no doubt looked into the state’s future by looking at its past.

Even if an economic turnaround began today, and brought to a halt the current employment skid, Smart Politics projects it could take at least four years to restore the 65,000+ jobs lost in the state during 2008.

Minnesota began January 2008 with a seasonally adjusted unemployment rate of 4.7 percent, with 137,360 residents out of work. The state closed 2008 in December with 6.9 percent of the labor force jobless, or 202,814 – a net job loss for the year of 65,454 workers.

The last time Minnesota endured an unemployment rate of 6.9 percent was 25 years ago, in January 1984. At that point Minnesota was already in an economic upswing, with unemployment levels having dropped or flattened in 14 consecutive months, dating back to November 1982 when the jobless rate peaked at 9.0 percent.

However, it still took the state nearly four years – from January 1984 to December 1987 – to reduce the unemployment rate from 6.9 to 4.7 percent. At that rate, Minnesota wouldn’t restore the 65,000+ jobs lost in 2008 until December 2012.

That, however, might be the optimistic view, as there is even more sobering news for the state of Minnesota today compared to the economic situation of January 1984: there are few signs the state will be able to stop the bleeding in the short-term and more job losses are expected throughout 2009.

Moreover, while the start and rate of recovery from this period of economic hardship cannot be known at this time, the fact that it will likely not mirror the rate from 1984-1987 is probably because it will only be worse – given the Governor’s characterization of Minnesota’s current economic crisis as the worst in the state since the Great Depression.

Minnesota’s Employment Recovery, 1984-1987

Year	Month	# Unemployed	Rate
1984	January	151,390	6.9
1984	February	144,057	6.5
1984	March	141,796	6.4
1984	April	143,697	6.5
1984	May	142,063	6.4
1984	June	140,476	6.3
1984	July	135,560	6.1
1984	August	133,884	6.0
1984	September	133,554	6.0
1984	October	132,264	5.9
1984	November	131,930	5.9
1984	December	137,087	6.1
1985	January	137,263	6.2
1985	February	133,455	6.0
1985	March	131,173	5.9
1985	April	132,169	5.9
1985	May	127,314	5.7
1985	June	128,558	5.8
1985	July	137,725	6.1
1985	August	131,940	5.9
1985	September	136,254	6.0
1985	October	136,429	6.1
1985	November	136,313	6.1
1985	December	141,639	6.3
1986	January	134,660	6.0
1986	February	134,349	6.0
1986	March	133,338	5.9
1986	April	129,954	5.8
1986	May	124,066	5.5
1986	June	123,419	5.5
1986	July	122,806	5.4
1986	August	119,453	5.3
1986	September	121,224	5.3
1986	October	121,575	5.4
1986	November	123,224	5.4
1986	December	123,109	5.4
1987	January	121,200	5.3
1987	February	122,437	5.3
1987	March	122,802	5.4
1987	April	114,685	5.0
1987	May	120,417	5.3
1987	June	122,023	5.3
1987	July	118,056	5.1
1987	August	118,842	5.2
1987	September	117,471	5.1
1987	October	114,398	5.0
1987	November	113,167	4.9
1987	December	109,651	4.7

Source: Minnesota Department of Employment and Economic Development.